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February 20, 2013

How to explain car insurance to teens

By Heather Larson, InsWeb.com

Your kid has just turned 16 and wants to start driving. However, before he gets behind the wheel, you need to tell him about the purpose of car insurance and how it works.

Some insurers have agents who will set up a meeting up a teen customer and explain the ins and outs of auto insurance. However, if you’re like most parents, the responsibility for explaining car insurance to your teen falls on you. But where should you begin?

Going over the basics

Start with a conversation describing the types of auto insurance coverage available, says Angela Preciado, USAA’s auto product management director. Tell your teen that liability coverage protects him if he’s at fault in an accident, comprehensive coverage takes care of damage to the car he’s driving and collision coverage pays to repair or replace a vehicle if he’s involved in a crash.

If your teen’s eyes haven’t glazed over yet, ask him to call three car insurance companies and get actual quotes for how much the premium will cost when he starts driving, says Tully Lehman, a spokesman for the nonprofit Insurance Information Network of California. He won’t actually buy the insurance; he’ll just find out how much it’s going to cost. By speaking with an agent or going online, your teen will better understand things like discounts and rate-setting factors.

By calling several insurers, the teen also will see the differences from company to company in terms of prices and coverage. This activity makes the insurance-buying process real to the teen.Auto insurance for teens

Teen driving programs

Many insurance companies offer teen driver education. Several, including Allstate, use the DVD-based teenSMART Program and Certification, says Jim Klapthor, an Allstate spokesman. In this crash-reduction program, a teen uses a computer mouse and keyboard to simulate in real-life situations behind the wheel. Circumstances that arise include drivers behaving unpredictably, cars traveling in a driver’s blind spot or pedestrians not looking where they’re going.

At Allstate, this program costs $90; successful completion gains a $100 insurance discount. Check with your own insurance company to see whether participating in this program or a similar one will yield a discount.

American Family Insurance offers the Teen Safe Driver Program for teens who already drive. It’s a coaching program that the company says has helped teenagers reduce risky driving behavior by more than 70 percent. DriveCam, the company that provides the technology, analysis and coaching services for Teen Safe Driver, analyzes each incident captured by the system.

Components of this program include in-car technology that tracks things like sudden stops or swerves. Cameras inside and outside the car send video and audio clips of the teen driver’s behind-the-wheel activities to the parents as well as to a driving coach. The driving coach then evaluates the clips to see where there’s room for improvement. If you buy car insurance from American Family, this program is free.

Rules for the road

Let your teen know how important it is to follow the rules of the road and to keep a current car insurance identification card in the glovebox along with the car registration, Preciado says.

“Make sure your teenager knows who to call if he has a claim and has that information with him at all times, whether it is on the insurance card or somewhere else,” she says.

Lehman advises parents to strongly emphasize to a teen driver how important it is to drive safely. Remind him that if he develops good driving habits at the outset, the habits will become commonplace and he’ll qualify for good driver discounts.

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